Definition:
CDs are a special type of time deposit in which the issuer (banks and other financial institutions) promises to pay a higher-than-average interest rate over a pre-determined period and in exchange the depositor promises not to withdraw the funds before the period is over or they face a penalty. The period of the CD is almost always short-medium term, anywhere from one month to five years, and as long as deposits per institution don't exceed the FDIC limit, they are guaranteed against loss.
